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Defaulting on loan contract instalments: whenever does a creditor’s claim prescribe?

Defaulting on loan contract instalments: whenever does a creditor’s claim prescribe?

Acceleration clauses can be discovered in loan agreements that want debtors in order to make payment in instalments. an acceleration that is standard provides that when a debtor doesn’t spend an instalment, the creditor may elect to end the mortgage contract and need re re re payment for the complete amount owing underneath the contract.

Issue of prescription into the context of acceleration clauses arose recently within the Supreme Court of Appeal (“SCA”) within the full instance of Standard Bank of Southern Africa Ltd v Miracle Mile Investments 67 (Pty) Ltd and Another 2016 3 All SA 487 (SCA). In specific, the SCA had been confronted with this concern: does prescription regarding the complete amount advanced level commence operating if the creditor elects to enforce the acceleration clause or as soon as the debtor defaults on re re payment of an instalment?

In cases like this, in 2005, the creditor, the conventional Bank of Southern Africa (“the bank”), advanced level a credit line to a person debtor to a maximum value of roughly R14-million. The participants, two organizations, endured surety when it comes to principal financial obligation and allowed the enrollment of specific home loan bonds over their immovable properties, as protection for the major financial obligation. An acceleration was included by the loan agreement clause that granted the financial institution an election to end the contract and speed up your debt upon breach because of the debtor.